Charlie Robinson's Blog

TRUSTEE TEST Part One

    Family member trustees are the target for the biggest growth practice in Florida, which is fiduciary litigation:  family beneficiaries suing family trustees for failing to meet their duties as trustee.  In representing a family member as trustee our goal is to make the trustee a family hero, not defendant.  If you are serving as trustee, or nominated to serve as trustee, see how you do with the following test:

Question 1: Do you understand the terms of the trust agreement and can you explain them to the trust’s beneficiaries?

Answer:  I am amazed at how often trustees want to ignore or avoid the terms of a trust. All beneficiaries of the trust have a right to expect that the terms of the trust will be carried out as directed in the document. The successor trustee does not have the ability to change the trust’s beneficiaries or to amend the terms of the trust, except in very specific circumstances.

Question 2: Is there a current beneficiary entitled to income for life? If so, do you know how to calculate the income distributions?

Answer:   One of the most challenging fiduciary jobs is to serve as trustee of a trust naming a life beneficiary with others to receive assets on the death of that beneficiary. Life beneficiaries are usually looking to the trustee to maximize income and to invest trust assets accordingly. The remainder beneficiaries want the trustee to invest for growth over income.

Typically, the trust agreement will state that all net income must be distributed to the life beneficiary on a stated basis. The trustee must know how to calculate net fiduciary income in order to determine how much to distribute. Additionally, Florida law gives certain trustees the power to adjust between principal and income, if the adjustment is fair and reasonable to all beneficiaries. Finally, Florida law also allows certain trustees to convert the trust from paying net income to a unitrust amount, which is a percentage of the trust’s market value on a certain date. Therefore, the trustee must know: 1) how to calculate income, 2) when to consider using the power to adjust and if the trustee has this power, and 3) when to consider converting to a unitrust and if the trustee has this right.

Question 3: Is the current beneficiary entitled to discretionary principal distributions? Do you understand the standards which are listed in the trust agreement for making principal distributions? Do you need to consider the impact of all principal distributions on the remainder beneficiaries?

Answer:  The trustee must be careful, consistent and even-handed in making discretionary principal payments to a current beneficiary, unless the settlor is the current beneficiary. While the settlor is still living, the settlor is the sole beneficiary of the trust unless the trust agreement states otherwise. During the settlor’s lifetime, the trustee usually must distribute the trust assets to the settlor as requested by the settlor or based on the terms contained in the trust.

After the trust’s death, the trust agreement may include specific circumstances when the trustee may distribute principal to a current beneficiary, such as for that beneficiary’s health, education, support or maintenance. The current beneficiary may also have a right to withdraw the greater of $5,000 or five percent of the trust’s market value at the end of the year. The trustee must keep in mind that any distributions from principal ultimately reduce the amount that will be distributed to the remainder beneficiaries. Additionally, any distributions from principal reduce the amount invested to produce income.

More Questions and Answers to follow in a later Article on my blog.

For answers to other fiduciary questions, go to my web site,

www.charlie-robinson.com.

Need help?  Call Louise Robinson at 727-441-4516

LIFE PLANNING- MORE DIFFICULT AND COMPLEX THAN DEATH PLANNING

The headline story in St. Petersburg Time September 27^th “Lifetime of Premiums Get Him Limited Hospital Time” relates a true story I hear often in my practice.  John was 74 and his wife, Helga, 68 when John’s Medicare and supplemental insurance time was exhausted during his many hospital stays since his stroke in September 2008.  Helga arrived at the hospital one night to learn the doctor’s order that her husband had to leave that night!  With his insurance maxed out they now face the expense of total care at a nursing home.  Their finances are wrecked.  Helga was told to apply for Medicaid.  To qualify they must give up all but $1352 of their monthly $4300 pension, leaving barely enough to make car payment, taxes, groceries and care of their autistic son. Life as they knew it took an abrupt turn for the worse.  Bad things happen to good people every day.   

    Maybe you have executed legal instruments for final disposition of your home and other assets upon death.  You feel that these documents are in place and reflect your wishes.  Perhaps you even have a Living Trust with a Trustee you can depend on to take care of you and carry out your wishes if you were unable to act.

    Maybe you have lived longer than you ever expected and events have intervened:  the death of your spouse;  a catastrophic event such as a stroke, Alzheimer’s, heart disease, ALS, muscular dystrophy, multiple sclerosis, scleroderma, cancer.  Any number of disabling events can change your whole lifestyle and alter all your plans.

    Long term chronic illness or disability does not fit the planning you made fifteen or twenty years ago.  Your spouse is left to cope with your care and the enormous cost involved.  Hospitals, doctors, therapy and medications eat into your income and savings at an alarming rate.  Panic grips you and your family with the realization that a nursing home may be your destination.  How to pay for your care and still have enough for your spouse to live on becomes the primary worry.  If the caregiver falls ill, then both of you need care and your support system comes crashing down.

    You may be a blended family where one or both spouses have children by a previous marriage.  Typically, parties to blended marriages want to provide for their spouse and also for the children of their prior marriage.  Sometimes they want to provide for the children of their spouse’s prior marriage and sometimes not.  When one of the spouses develops long term chronic illness or other disability, it adds another dimension of complexity

    Perhaps your spouse or a child has special needs and requires special care.  Your revised planning must take into account the augmented estate choices, and how those choices fit with the need for Medicaid qualification

    There is a way to deal with these issues effectively. Meeting with a Certified Elder Law attorney will begin the process.  He or shewill assess all aspects of your current situation.  The attorney will ask about medical diagnosis, present living arrangements, each spouse’s level of personal care ability, family assistance, your assets and how they are titled, and review your documents including health care powers, trusts, and wills.  Determining exactly where you stand on these matters is primary to helping you solve your problems.

    As an Elder Law Attorney I learned early on that life with chronic illness, incapacity, or disability is usually far more complicated than planning for death for the individual and the caregiving family.

 

Don't forget to check out my website at www.charlie-robinson.com

Elder Law Practice in 2020

Elder Law attorneys deal with the legal, health and social issues connected with aging. Medicare does a good job for seniors with cancer, heart disease, and other acute illness. The Medicare patient who needs open heart surgery is likely to run up medical and hospital bills in the hundreds of thousands of dollars with out of pocket share of cost  being a few thousand dollars at most. However, Seniors afflicted with chronic illness such as stroke, Alzheimer’s Parkinson’s, MS, and Lou Gehrig’s are very limited in Medicare coverage. Medicare may provide up to 100 days of skilled or rehabilitative care if preceded by at least a three day hospital stay.  The patient must be making progress with rehab and most do not receive anywhere close to 100 days of coverage. When Medicare benefits terminate, the payment sources for the $6-10,000 per month cost of nursing home care are limited to long term care insurance(hard to get and expensive), VA benefits,  Medicaid and personal resources.

As an elder law attorney, I guide clients through the maze of the senior chronic care system to help marshal all possible resources to provide the best care possible and at the same time preserve some of their life savings. In addition, many elder law attorneys provide planning advice for persons of all ages with disabilities. ( Special Needs Trusts allow a disabled person the opportunity to live more comfortable lives with the combined benefit of public benefits and protected private resources. Other trusts protect seniors whose income exceed Medicaid limits but are well below the monthly cost of care.

   

What will the elder law practice look like in 2020? I believe it will be very different because I believe our health care system will be very different.

Three Looming Crises.  I believe that the confluence of three crises illustrates the scope of challenges we face in the future for our health care system for seniors and the disabled.  It is not necessary to do much analysis to understand that we are in a crisis that is likely to get worse rather than better. There is a much longer list of needs and health problems, but each of the following three crises is enough to change the public benefits paradigm in the United States.

First is the continued growth of Alzheimer’s disease with an aging population.  The Alzheimer’s Association predicts that Alzheimer’s disease alone will break the public benefits system unless a cure or effective treatment is found within the next ten years.

Second is the terrifying rise and cost of autism and related disorders. Autism prevalence has gone from 4 in ten thousand a few years ago to 1 in 166 and reported in the national media yesterday at 1 in 150. The number of those diagnosed continues to rise.  Lifetime direct and indirect costs to treat and care for an autistic child exceed 3.2 million dollars.  If the rate of growth in autism continues to rise or even remains constant, it is enough to break our public benefits system.

Third is the aging of the baby boomers. If this age wave needs, wants and expects the level of care currently provided by Medicare and Medicaid, we will have costs rising at a rate most citizens and politicians are likely to find unacceptable.  Federal Reserve Chairman Ben S. Bernanke has cautioned the country saying in a speech on October 4, 2006, that “…the coming demographic transition will have a major impact on the federal budget…continuing for many decades.”  Bernanke predicts that Social Security and Medicare will change from the current 7% of domestic product to 13% by 2030.  Bernanke says the country will have to choose among higher taxes, reduction in payments for entitlement programs, a sharply higher budget deficit, or some combination.  He suggests that taxes would have to be increased by at least one-third over the next 25 years.

As the Obama administration  moves into a full court press for a new health care system for the United States that may be more affordable, comprehensive, and include the more than 47,000,000 Americans with no health care coverage at all. Will universal health care solve the senior and special needs population health crisis? Will we move to a health care rationing system that will effectively make care less available rather than more? How will the new health care system treat chronic illness and disability? There is no bipartisanship and little consensus in Congress other than some change to our health care system in critical.

Medicaid has passed education in Florida’s budget at a time when casualty insurance and real estate taxes are perceived to be beyond the taxpayer’s ability and willingness to pay. Where will the cuts be made as the state’s crisis deepens? Long accepted planning techniques for disabled persons will eventually be under the government microscope. Special Needs Trusts that provide for supplemental needs and allow the individual to collect government benefits are likely to be in bipartisan trouble.

William Mitchell School of Law Professor Kim Dayton believes that rationing will come with universal health care. In her paper “The Future of Elder Law: End of Life Issues” prepared for the National Academy of Elder Law Attorneys Institute November, 2006, Professor Dayton suggests the new system may take one of the following  rationing choices:

• You get a certain number of years, but that’s all (how many?)
• You get a certain quality of life, but that’s all (what is quality, anyway?)
• You get what you can pay for yourself, but that’s all (it’s the American way)
• You get basic treatment, that’s all
• You get what you need, but not if your diseases or disabilities are self-induced (no liver transplants for alcoholics or triple bypass surgery for smokers)
• You get what you need if you are someone of past, current, or future importance
• The closer you are to dying (due to age or disease), the less health care you get

Three Ways to Deal with These Crises.  How do we as elder law attorneys deal with these extremely negative possibilities for the future?  There are several possible ideas that bear consideration.

1.    Take Personal Financial Responsibility.  Each of us must advise our clients to take personal financial responsibility for the care of our special needs loved ones. Elder law attorneys and estate planners must budget long term care into client estate and financial plans. Once a person makes age 60, she or he have a 60% likelihood of needing long term care. The traditional approach of dealing only with planning for death must change into planning for life with the strong probability that each client will have chronic illness. I believe it is foolish to believe that government benefits will be close to adequate in 2020 to provide for seniors and the disabled.

2.    Become Politically Involved.  Become politically active. As elder law and estate planning attorneys we see and hear many wrenching stories from a generation Tom Brokaw correctly named “The greatest.” You and I are positioned to advocate for fair treatment for these great people. Their stories often trump the pure economic concerns expressed by elected officials at the municipal, state, and national levels. We can put the faces and the minds and the dreams and the challenges of your beloved seniors in front of public officials who are in a position to help. We must find cures for these terrible chronic illnesses and disabling afflictions.

3.    Be Visible.  The public needs to feel the positive impact of our seniors. Aging is not just about illness. We need to see aging not always as decline but also as the accumulation of wisdom.  The challenges are clearly in front of us Elder law and estate planning attorneys must take on these challenges now, not only for the current generation but for future generations as well.

As elder law and estate planning attorneys, we must choose whether we drive our own vehicles in the future and end up where we want to be or be mere passengers dropped off wherever others decide. There is little likelihood that our health care system will become any easier to navigate in the future. As we advise senior and disabled clients of all ages to be proactive and creative, we can do no less.

Crisis Times Require Crisis Planning

     In these economic times you have to do everything you can to protect every dollar you have left. When a loved one develops chronic illness such as Alzheimer’s, Parkinson’s, or stroke, the emotional and financial costs to the individual and family can be catastrophic. Qualifying for Medicaid, VA and otherovernment benefits becomes necessary when middle class families face nursing home bills from$6,000 to $10,000 plus per month.

My office helps families stricken with chronic illness and disabilities manage situations considered unmanageable. We have to think more strategically in order to work through the crisis to make the very best use of our assets and find additional resources to help defray the long term care costs. VA benefits for veterans and surviving spouses of deceased veterans can be financial lifesavers where appropriate. Most veterans and surviving spouses of deceased veterans are totally unaware of benefits available, particularly pension. We can integrate our planning for immediate VA benefits followed by Medicaid when needed. Careful planning allows the family to develop and maintain a sense of direction so that we can manage our way through difficult times rather than worry our way through them.

For many years I have welcomed the opportunity to help families deal effectively with the potentially devastating loss that comes with disability and chronic illness by turning that loss potential into an effective plan for the best care possible, peace of mind and protection of their hard-earned life savings. Even with recent law changes we are most often able to save nearly all assets for a married person and at least half for a single person.

Our office web site at www.charlie-robinson.com explains how we can help.

© 2009 Charles F. Robinson

THE FUTURE OF BOOKS

    My friend and colleague Phil Shuey and I have been carrying on an email debate about the future of books.  The discussion arose because of an article in New York Times about Amazon pulling back George Orwell’s “1984” and “Animal Farm” from its e-books, and even bleeped it from users’ digital lockers and Kindles.  The question posed was when you buy an e-book from Amazon do you own it?

I don't think it matters. 

The shift we are beginning to experience is disruptive.  "Disruptive" means disruptive to the current set of rules. I don't know about your part of the country, but around here budget cuts are causing branch libraries to close and main libraries to keep hours when most folks who are still employed can't access them. Book publishing business has not changed much since Gutenberg came up with movable type. They overproduce books and consign to book stores with right of return so, unless the book is a da Vinci Code or something that sells well, publishers eat the shipping and printing costs for unsold books. Electronic publishing takes away the waste of printing, shipping, and

Phil believes that electronic books are disruptive technology but doesn’t think the library is about to disappear.

I would not begin to argue that Kindle and its competitors rule the world but I do believe in a few generations the commoditized version will be hard to turn down for some tactile charm that goes with page-turning.

I still remember the heavy books in high school and college and the scam of the slightly updated college text that made the used of no value. Now Amazon has introduced its larger model and contracted with some major universities to supply textbooks on Kindle.

Amazon has started a revolution that is unpredictable as to where it will end but I believe it is a trend and not a cycle.

Education is not going to look like it did for us and there is a loss because of that. I had a wonderful time in high school, college, and law school and managed to save most of my intellect for post graduate learning (do you hear me humming Kodachrome in the background?).

I always underestimate the time it takes for a paradigm to shift and don't think this will be a fast mover but I believe it will move. I remember being in New York with friends years ago who had just purchased one of the first digital cameras. My immediate reaction was "film is dead." Too bad Kodak didn’t get it for a long time.

VA Benefits- Are you Missing Out?

 

 

 

VA Benefits are like dining out where you have a coupon for a free dinner if you pay for one dinner, and then forgetting you have that coupon.

 

The Veteran has already paid but may forget or not realize he or she has something more coming. 

The VA benefits may be in your pocket if you just qualify for them and then apply for them.

 

Wouldn’t it be nice if your Mom or Dad could find a coupon worth an extra $1,056 to $1,949 each month to help pay for the assisted living bill?

 

Two of these benefits the veteran may be entitled to include a VA Disability Pension, or VA Disability Compensation, two different benefits.  The VA Disability Pension is paid to wartime veteran who has limited or no income, and who is at least 65, or who is permanently and totally disabled.  The VA Disability Compensation is paid to a veteran because of injuries or diseases that happened while on active duty, or were made worse by active military service. It is also paid to certain veterans disabled from VA health care.

 

 Veterans who are more seriously disabled may qualify for increased benefits based on Aid and Attendance or being Housebound. 

 

The veteran’s survivors also may be entitled to benefits such as VA Dependents Compensation.  This is a benefit payable to survivors of a serviceman or woman who died while on active duty or died from service-related disability.  Survivors also are entitled if the veteran was receiving 100% disability compensation at time of death. 

 

Other benefits for survivors include a VA Death Pension, a VA Parents Pension, and other compensation for specific needs such as burial expenses, clothing allowance, and other needs. 

 

These benefits and more are discussed in detail at my web site:  www.charlie-robinson.com.

 

.  Future articles will discuss eligibility and qualification for benefits ; what we do to help folks qualify for them; and integrating VA benefits with Medicaid planning

 

    It’s best to know about these things sooner rather than later:

 

A grandmother was telling her little granddaughter what her own childhood was like: “We used to skate outside on a pond. I had a swing made from a tire; it hung from a tree in our front yard.  We rode our pony.  We picked wild raspberries in the woods.”  The little girl was wide-eyed, taking this all in.  At last she said, “I sure wish I’d gotten to know you sooner!”

Plenty To Talk About- Charlie Robinson

We are living the ancient Chinese curse "You shall live in interesting time." These are interesting times for seniors and their families facing long term care as a result of chronic illness. Medicare still does a pretty good job of dealing with acute illness such as cancer and heart disease. However, if you need long term care from such chronic afflictions like Alzheimer's Disease, Lou Gehrig's, Parkinson's and stroke, you have limited choices for how to pay for your care. I practice Elder Law in Clearwater, Florida, and see families lose their life savings paying for nursing care. My job is to provide alternatives that will protect some of those hard-earned funds to improve quality of life for the ill person and her family.

My office also represents trustees who want to do the best possible job in following the terms of the trust to help beneficiaries as the trust intended and follow a very complex area of the law known as "fiduciary responsibility." Many people believe they can successfully serve as trustees by being fair and honest. Fair and honest are an important start, but only the tip of the iceberg. I look forward to your comments as we post information with tips and traps the trustee must know about to do the job right.

Another area I speak, write, and think about is how to develop foresight on the future of the legal profession. I don't know what alll the future holds for us, but I believe strongly that it will be very different from the past and the present.

I will go off the track from time to time to brag about my wife, adult children Charlie Jr. and Nicole, and grandchildren Tripp, Kayla, Emma, Arden, and Cassidy. If I can figure out this technology, you may even see some pictures.

I am 65 years old and my biggest fear is that I might become an adult some day. Hopefully, we will find humor in the light and heavy subjects as well. We created a respite room on my web site that includes recipes and an occasional book report.

Charlie Robinson